Actually I'm torn between CD and FLAC downloads.
I have quite a large CD collection, and storage has been an issue, though to be honest I don't buy as much music as I once did, I guess I've reached the age where contemporary music doesn't interest me as much as when I was 20 or 30 years younger and have amassed quite a sizeable collection of Classical CD's that span the repertoire I'm intersted in.
Any music I now buy tends to be in FLAC format from The Classical Shop generally on their 50% off offer or as part of my subscription to B&W's Society of Sound. I play the FLACs via an external hard drive connected to my NP30 rather than mess with streaming and as far as I'm concerned the sound quality from FLAC is as good as CD though as I'm in my 50's my hearing probably isn't as acute as it used to be.
There is a great convenience factor in using the NP30 but the main advantage is in the saving of storage space which outweighs the faffing around of backing up etc, though with the Classical Shop you are apparently able to re-download at any time, as long as they stay in business of course.
Which do I really prefer? It has to be the physical disc everytime not so much for quality of sound but it's so satisfying to hold a cd, see the artwork, and read the booklet and know it's mine, rather than a set of files on a hard drive.
I also have my pre-cd collection of vinyl, that still gets an airing now and then, but I wouldn't buy any new vinyl. The thing that really used to p me off about vinyl was the crap quality, crackling, popping, warped records etc. I used to be a real pain returning records that weren't perfect but would often find the same fault in the replacements, I actually couldn't wait to get my hands on a cd player when they came out and just stopped buying vinyl. I remember my first CD purchase was Avalon by Roxy Music....ah nostalgia!